L5M3 PDF Dumps | Oct 06, 2023 Recently Updated Questions
L5M3 Exam Questions – Valid L5M3 Dumps Pdf
CIPS L5M3 Exam is essential for procurement professionals who are looking to advance their career in the field of contract management. Managing Contractual Risk certification demonstrates that you have the necessary skills and knowledge to manage contracts effectively, mitigate risks, and build strong relationships with suppliers. It is also a valuable certification for employers who are looking to hire procurement professionals with expertise in contract management.
NEW QUESTION # 24
Which of the following will you put into box 8?
- A. mediation
- B. litigation
- C. adjudication
- D. arbitration
Answer: D
Explanation:
The correct answers are as follows:
This is arbitration as it involves a panel.
NEW QUESTION # 25
Which of the following will you put into box 7?
- A. Contract variation
- B. liquidated damages
- C. payment terms
- D. liability
Answer: A
Explanation:
The correct answers are as follows:
This is a contract variation as they are changing the number of staff and their hours
NEW QUESTION # 26
A failure to perform a provision of a contract which does not affect the end performance of the contract is known as what?
- A. warranty breach
- B. small breach
- C. major breach
- D. minor breach
Answer: D
Explanation:
This is a minor breach. This is the definition as given in the study guide on p. 48
NEW QUESTION # 27
Which of the following will you put into box 8?
- A. Innominate Term
- B. Condition
- C. Warranty
Answer: A
Explanation:
The correct answers are as follows:
This is a condition. Again the food being organic would be fundamental to the contract as the health of the llamas depend on it.
This is arbitration as it involves a panel.
This is an innominate term as it won't be mentioned in the contract. It won't be until a breach occurs when it is decided whether the issue of subcontracting is a condition or a warranty, and which one it will be, will likely depend on the situation. For example if they subcontract out to a non-organic llama food provider, that would probably be a Condition. If they get help fulfilling an order and the subcontractor is also organic, that's probably a warranty.
NEW QUESTION # 28
Which of the following is a source of breach in a contract?
- A. warranty
- B. force majeure
- C. liability
- D. negligence
Answer: D
Explanation:
Negligence can be a source of a breach. P.42
NEW QUESTION # 29
A failure to perform a provision of a contract which does not affect the end performance of the contract is known as what?
- A. warranty breach
- B. small breach
- C. major breach
- D. minor breach
Answer: D
Explanation:
This is a minor breach. This is the definition as given in the study guide on p. 48
NEW QUESTION # 30
Which of the following will you put into box 2?
- A. Subcontracting
- B. Payment Term
- C. Time is of the Essence
- D. Specification
Answer: B
Explanation:
The correct answers are as follows:
This is payment terms. The scenario mentions processing invoices, which is to do with paying the supplier
NEW QUESTION # 31
Which of the following will you put into box 1?
- A. reputational damage
- B. penalty clause
- C. subcontracting
- D. consequential loss
Answer: D
Explanation:
The correct answers are as follows:
This is consequential loss. Brian Air is going to lose the profits from the sales of the flights it had sold. Now those flights won't go ahead Brian Air can claim for consequential loss which would help balance the books.
NEW QUESTION # 32
Which of the following would be included in a contract to assign costs and responsibilities be-tween buyer and seller when products are delivered?
- A. Indemnity
- B. Liquidated Damages
- C. Incoterms
- D. Liability
Answer: C
Explanation:
Incoterms assign costs and responsibilities about when products are delivered. See p. 37 for a full list of the different Incoterms. You don't need to know all Incoterms for the exam, but it's a good idea to know what they are and why they'd be put into a contract
NEW QUESTION # 33
Which of the following is a consensual form of dispute resolution?
- A. litigation
- B. mediation
- C. negotiation
- D. adjudication
Answer: B
Explanation:
Mediation is consensual- consensual is when a third party is introduced to help reach an agreement. This is in contrast to adjudicative dispute resolution in which the third party acts as a judge and decision maker. Negotiation doesn't involve a third party so is neither. See p. 137.
NEW QUESTION # 34
What is the name given to a term in a contract where one party promises to compensate the other party for a trigger event?
- A. damages
- B. warranty
- C. liability
- D. indemnity
Answer: D
Explanation:
Indemnity- this is the definition given on p. 20
NEW QUESTION # 35
Which of these is NOT a stage in negotiation?
- A. proposal
- B. adjourning
- C. agreement
- D. bargaining
Answer: B
Explanation:
Adjourning is not a stage. The 6 stages of negotiation are; preparation, opening, discussion, pro-posal, bargaining and agreement. P.64
NEW QUESTION # 36
A breach which is so severe that it goes to the root of the contract is known as what?
- A. condition breach
- B. major breach
- C. fundamental breach
- D. essence breach
Answer: C
Explanation:
This is a Fundamental Breach. Fundamental Breach and Major Breach are very similar- they're both really bad and can lead to damages and the termination of the contract. The difference is that a Fundamental Breach is so bad that it goes to the root of the contract - a breach so bad that the contract is basically worthless. For example if you make a contract with a supplier to have potatoes delivered but it turns out they don't sell potatoes, only apples, and they keep sending you apples instead of potatoes. This would be a fundamental breach because its something so fundamental to the contract that there's no point in the contract existing if there's a breach like this. Condition Breach and Essence Breach are made up words- they don't exist. P.44
NEW QUESTION # 37
Alan has an ongoing contract with a supplier for the provision of gardening tools to his horti-culture business. He has been working with the supplier for over 20 years and has recently discovered that the supplier committed a breach in a warranty 3 years ago. Can Alan claim damages?
- A. no- Alan cannot claim because the breach was so long ago
- B. yes- the breach has occurred and a contract is in place
- C. yes- Alan can claim damages and rescind the contract
- D. no- Alan could only claim if the breach was of a condition, not a warranty
Answer: B
Explanation:
"Yes- A Breach has occurred and a contract is in place" - this is the correct answer. Claims against warranties can be made up to six years from the date the contract is breached. Option 2 isn't correct as a breach in warranty does not allow you to rescind the contract. Options 3 and 4 are incorrect because Alan CAN claim damages. There's a useful table about warranties and conditions on p. 127
NEW QUESTION # 38
Terry's Toys is a Toy Manufacturer who has an agreement to provide Toys to an online re-tailer. The retailer has ordered 500 toys from Terry and Terry has incurred costs of £3000 manufacturing the toys. Halfway through production the retailer calls Terry to cancel the order. Terry reads through the contract and sees a liquidated damages clause of £1000. What should Terry do?
- A. Terry can deliver the toys as agreed as there is a contract in place
- B. Terry can apply to the court to increase the liquidated damages to £3000
- C. Terry can do nothing and must pay the additional £2000 out of his own pocket
- D. Terry can sue the retailer for the additional costs incurred above the liquidated damages
Answer: C
Explanation:
The correct answer is 4- Terry can do nothing and must pay the additional £2000 out of his own pocket. Liquidated damages are a pre-estimate of loss - they can't be changed by a court and you can't demand the buyer pays any higher than this if you actually lose more than is stated. This is one of the major disadvantages of having liquidated damages. Option 3 is a bad idea- the retailer has communicated that they do not want the toys so Terry is likely to only incur additional costs if he continues manufacturing them and delivers them. See p.106. There are lots of questions like this in the exam. Remember to think what the study guide would say- rather than what would happen in real life. Don't over complicate things.
NEW QUESTION # 39
Which of the following conflict resolution styles involves a strict timeline and is commonly used within the construction industry?
- A. litigation
- B. conciliation
- C. arbitration
- D. adjudication
Answer: D
Explanation:
Adjudication has strict timescales (this is one of the advantages of using this conflict resolution method). It has roots in the construction industry and has been widely used since the 1990s. See p.76 for more information
NEW QUESTION # 40
Which of the following processes is the most adversarial?
- A. litigation
- B. mediation
- C. negotiation
- D. adjudication
Answer: A
Explanation:
Litigation is the most adversarial. It's usually the last resort and shouldn't be used if you want to preserve the working relationship. P. 145
NEW QUESTION # 41
Which of the following must a legally binding contract contain? Select THREE
- A. Indemnity
- B. Capacity
- C. Intention
- D. Liability
- E. Consideration
Answer: B,C,E
Explanation:
Intention, Consideration and Capacity are the correct answers. A contract must contain 5 elements to be legally binding. As well as these three, the other two factors are offer and acceptance. P.2 of the study guide.
NEW QUESTION # 42
Penguin Ltd has a contract with Blue Company. Blue Company has just broken a warranty in the contract. What remedies does Penguin Ltd have available?
- A. they can sue and claim damages
- B. they can claim damages but not terminate the contract
- C. they can claim damages and terminate the contract
- D. they can terminate the contract but cannot claim damages
Answer: B
Explanation:
They can claim damages but not terminate the contract. If Blue company has broken a Condition, they would be able to terminate the contract, but this isn't the case for a breach of a Warranty. See p.43 for more details
NEW QUESTION # 43
What is the purpose of a liability clause in a contract?
- A. to punish the supplier for poor performance
- B. to ensure adherence to legal standards
- C. to limit commercial and financial exposure
- D. to give an approximate pre-determined value of loss
Answer: C
Explanation:
The purpose of liability clauses is "to limit commercial and financial exposure"- this is a direct quote from p.2. Liability is the amount that a company owes to another party- this is why contracts will focus on limiting their liability as much as possible.
NEW QUESTION # 44
Sarah is a baker and orders free-range eggs from a local supplier which she uses to make cakes. There is a contract in place which included a specification that states that the eggs must be free-range. One day the supplier delivers eggs which Sarah uses in the cakes. Later she dis-covered that these were not free-range. Sarah believes that the supplier has broken the con-tract. Is this true?
- A. Yes- this is a breach of a condition
- B. no- the specification is not a contract document
- C. no - there has been a breach in a warranty
- D. Yes- this is a fundamental breach
Answer: C
Explanation:
"No- there has been a breach in warranty" is the correct answer. The key to answering this question lies in the fact that the specification in this example is a warranty rather than a condition of the contract. P.45 of the study guide explains that the Sale of Goods Act has implications on whether or not a specification is a condition, warranty or innominate term and it's all about whether the product is in 'good condition' and can be used for its intended purpose. In this example the eggs were used for their intended purpose and were in good condition (or Sarah wouldn't have put them in the cakes). Therefore in this example, the eggs needing to be free-range is a warranty of the contract not a condition. Therefore options A and B are both wrong. Answer C is also wrong because the question mentioned that the specification was included in the contract. If you want to know more about the implication of the Sale of Goods act on specifications see p.45.
NEW QUESTION # 45
Service Credits are a form of what?
- A. KPI
- B. liquidated damages
- C. Consideration
- D. indemnity
Answer: B
Explanation:
Service Credits are a form of Liquidated Damages - it's a financial remedy, common in the IT in-dustry, which is available to a buyer when the service level falls below an expected level. See p. 31 for more details.
NEW QUESTION # 46
Which of the following are advantages to seeking a solution to conflict via litigation?
- A. The process is quick and cost-effective
- B. The decision can be made by someone who isn't an expert in their field.
- C. There is no confidentiality
- D. the process provides certainty that an outcome will be reached
Answer: D
Explanation:
The correct answer is 1 'the process provides certainty that an outcome will be reached'. Options 2 and 3 are true statements but they are not advantages of litigation, they are disadvantages. Option 4 is false - litigation is a long and costly process. See p. 85 for more information on litigation
NEW QUESTION # 47
When drafting a liability clause in a contract, which of the following statements are TRUE? Select THREE
- A. liability can only be limited where there is valid insurance
- B. liability cannot be excluded for injury resulting from negligence
- C. exclusions should be narrowly defined and clearly state which types of liabilities are excluded
- D. liability is a legal responsibility
- E. the goal of the liability clause is to punish the contractor for poor performance
Answer: B,C,D
Explanation:
The correct answers are 1, 3 and 5: exclusions should be narrowly defined and clearly state which types of liabilities are excluded, liability is a legal responsibility and liability cannot be excluded for injury resulting from negligence. These are all explained on p. 22. Liability is never there to publish anyone (this is a red herring answer that CIPS like to put into different questions and it's usually the wrong answer - no one should look to publish anyone else). The option 'Liability can only be limited where there is valid insurance' is not true. A contract can state any limitations on liability so long as it's agreed by both parties, they're fair and don't contradict any laws. The thing about not being able to exclude liability regarding personal injury is a Law in the UK.
NEW QUESTION # 48
......
CIPS L5M3 Managing Contractual Risk exam is highly relevant for procurement professionals who are responsible for managing contracts and ensuring that contractual risks are identified and managed effectively. L5M3 exam is particularly important for professionals working in industries where contracts are a critical component of business operations, such as construction, engineering, and IT. L5M3 exam is also relevant for professionals working in the public sector or for non-profit organizations, where contract management is essential for delivering public services or managing grants and funding.
L5M3 dumps Sure Practice with 118 Questions: https://www.freecram.com/CIPS-certification/L5M3-exam-dumps.html